US, UK Sign LNG Deal in Race to Secure Supplies for Next Year




  • In Business
  • 2022-12-07 00:01:00Z
  • By Bloomberg

(Bloomberg) -- Britain and the US agreed to work together to ensure liquefied natural gas keeps flowing next year in an effort to underpin energy supplies threatened by Russia's war in Ukraine.

Most Read from Bloomberg

  • 'Huge, Missing and Growing:' $65 Trillion in Dollar Debt Sparks Concern

  • Wall Street Goes Risk Off as Bank CEOs Sound Alarm: Markets Wrap

  • Ex-Deutsche Bank Trader Builds $6 Billion Fortune on Trading Boom

  • Trump Companies Are Convicted in NY Criminal Tax Fraud Trial

  • Third Russian Airfield Hit by Drone as Moscow Accuses Ukraine

London and Washington agreed to set up a joint action group that will work "with international partners and industry" to ensure at least 9-10 billion cubic meters of American LNG is delivered to the UK over the next year. While that's double the amount exported in 2021, it matches the record volume US producers delivered to the UK this year.

"We will look to identify opportunities to support commercial contracts that increase security of supply," UK Prime Minister Rishi Sunak and US President Joe Biden said in the joint statement. The US commitment includes providing the necessary regulatory environment to achieve the delivery goals.

Britain's accord is a result of the increased global competition for LNG, especially from Asia and the European Union, where Moscow's decision to throttle pipeline gas deliveries is threatening to push the continent's economy into recession. The US-UK agreement provides little clarity on how the LNG supplies will be secured, and Britain has already imported more than 10 billion cubic meters of US LNG this year.

The deal follows a similar agreement the US struck with the EU in March for at least 15 billion cubic meters of additional LNG this year. That accord raised questions over where exactly the supply would come from, as soaring EU gas prices would likely pull the super-chilled fuel to European shores anyway.

While the US filled some of Russia's supply gap by exporting record amounts of LNG from its seven plants, global markets are going to have to wait at least two more years before any new supplies from America come online. Three large-scale projects requiring more than $30 billion of financing are now under construction in Texas and Louisiana, yet none will be ready next year.

Still, the deal has political significance with the UK's Sunak trying to forge new trade deals and diplomatic relations with partners outside of Europe. The countries will collaborate on renewables and nuclear projects to reduce global dependence on Russian exports and help stabilize energy markets.

The partnership also aims to drive international investment in clean energy technologies and work to decarbonize the aerospace, aviation and automotive industries, according to the statement. The first meeting of the group will be held virtually on Thursday.

--With assistance from Gerson Freitas Jr..

Most Read from Bloomberg Businessweek

  • The Club With a 60,000-Woman Waitlist

  • The Viral List That Turned a Yale Professor Into an Enemy of the Russian State

  • How to Cash Out of a Small Business Without Selling Out

  • JPMorgan Is Still Trying to Fix Health Care

  • Twitter Under Elon Musk Still Has to Live in Apple's World

©2022 Bloomberg L.P.

COMMENTS

More Related News

ECB Plan for Next Big Hike Makes Lagarde Last Hawk Standing
ECB Plan for Next Big Hike Makes Lagarde Last Hawk Standing

(Bloomberg) -- Late to the global interest-rate hiking party, the European Central Bank is trying to convince everyone that it will also be one of the last...

Total Says Adani Exposure Is Just 2.4% of Capital Employed
Total Says Adani Exposure Is Just 2.4% of Capital Employed

(Bloomberg) -- France's TotalEnergies SE said its exposure to Adani Group companies was $3.1 billion of capital employed at the end of December, a small...

China Stock Rally Falters as Investors Seek Fresh Impetus
China Stock Rally Falters as Investors Seek Fresh Impetus

(Bloomberg) -- Chinese stocks saw their worst week in more than a month as investors looked for further catalysts to sustain a world-beating rally since the ...

Adani in Talks to Prepay Share Pledges to Boost Confidence
Adani in Talks to Prepay Share Pledges to Boost Confidence

(Bloomberg) -- Embattled billionaire Gautam Adani is in talks with creditors to prepay some loans backed by pledged shares as he seeks to restore confidence ...

India Parliament Adjourns for a Second Day Over Adani Issue
India Parliament Adjourns for a Second Day Over Adani Issue

(Bloomberg) -- Both houses of India's parliament were adjourned for a second day on Friday after opposition sloganeering and demands for a parliamentary...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Business